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On March 29, the government unveiled the 2012 budget, dubbed the Economic Action Plan 2012.

If you are a small business focused on innovation, there are a number of tax incentives and support programs that you could benefit from over the next five years. Here is an overview summary of what budget 2012 has in store.
Directed Funding for Innovation
There were a number of innovation funds which saw an increase in funds as a result of budget 2012, including:

Industrial Research Assistance Program (IRAP): Investment has been doubled in the 2012 budget and is now valued at $110 million per year.

National Research Council (NRC): Investment of $67 million for 2012-13 has been pledged to refocus on “business-led, industry-relevant research”.

Canadian Innovation Commercialization Program: Piloted in 2011, this program has become permanent with a commitment of $95 million over the next three years. An additional $40 million has then been pledged per year thereafter.

Business Financing
Recognizing the impact that venture capital funding has on helping businesses grow in the early stages of their development, the government has pledged $400 million to attract more private sector investors to early-stage risk capital. Over the coming months, the government will consider how to structure this support, in order to incentivise investors and the management of large-scale venture capital funds.

In addition, $100 million has been pledged to the Business Development Bank of Canada (BDC) to support its venture capital activities, and support the creation of large-scale venture capital funds led by the private sector.
Employment Incentives

Hiring Credits for Small Business: This popular program has been extended for one more year, following an investment of $205 million. As outlined in our previous article by Gabrielle Loren on the program, this credit is available to small businesses who increased their Employment Insurance premiums in 2011 over 2010 and whose premiums were under $10,000.

Summer Company Program: This summer program, which provides financial support to students who start a business while still in school, will be one of the benefactors of the Youth Employment Strategy’s additional funding of $50 million over two years.

Industrial Research and Development Internship: This national internship program, that links Canadian businesses with graduate students for research placements, has been provided $14 million over two years to specifically link science and business graduates with businesses.

Opportunities Fund: If you are a business who employs people with a disability or you are a business owner who has a disability you could receive funding through this labour market opportunities fund. Budget 2012 has pledged to invest $30 million over a three year period.

Filling the Skills Shortage
To help fill the growing skills shortage, the government signalled that it will support changes to help improve foreign credential recognition. It will work with provinces and territories to identify the next set of target occupations, and help integrate immigrants in the Canadian labour market. This includes:

Provide further incentives to retain educated and experienced talent through the Canadian Experience Class.

Introduce a new immigration stream to facilitate the entry of skilled tradespersons.

Target, through the Business Immigration Program, more active investment in Canadian growth companies and more innovative entrepreneurs.

Improve the Provincial Nominee Program by focusing on economic immigration streams in order to respond quickly to regional labour market demand.

To meet regional employer demand and improve the responsiveness of the Temporary Foreign Worker Program, the government has reduced the paper burden on you as the employer and shortened processing times.

Other Commitments

Scientific Research and Experimental Development (SR&ED) Program will change from providing indirect support via tax credits, to dedicating $1.1 billion of direct support over the next five years.

Forestry industry will also receive $105 million over the next two years to support innovation and market development.

EI premiums will become more predictable with a pledge to limit rate increases to 5 cents each year.

The pledge to reduce red tape through the “One-for-One” rule and reduce the tax compliance burden for businesses was reinforced.

Small Business BC – April 16, 2012

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